Struggling carrier Norwegian Air, one of Gatwick Airport’s largest airlines, will continue its bailout and unblock government aid after securing support from shareholders, bondholders and landlords. planes for a debt-for-equity swap of 10 billion crowns (£ 770 million).
After a weekend of frenzied talks, the airline’s shareholders gathered in an emergency meeting in Oslo on Monday and voted 95% in favor of all the proposals, including a share issue of 400 million crowns – even if the plan does erase them.
The plan will hand majority ownership over to the airline’s creditors – bondholders and lessors – and leave shareholders 5.2% of the company, but there was no alternative, Norwegian chief executive said, Jacob Schram. Without the rescue plan, “it will be game over,” he warned before the shareholders’ meeting.
“This is perhaps the most exciting financial thriller Norway has ever seen,” he said after the meeting.
The plan will release an additional 2.7 billion crowns in state aid to help the airline weather the coronavirus crisis, on top of the 300 million crowns the airline has already received. The Norwegian government made the package dependent on Norwegian solvency by writing off its debt.
Norwegian should now be able to avoid bankruptcy – good news for Gatwick, where the carrier is the third-largest airline, after British Airways significantly cut operations at the airport last week and warned it could withdraw completely from Gatwick.
Also on Monday, the European Union’s competition watchdog approved French state aid worth € 7 billion (£ 6 billion) for Air France. The Covid-19 pandemic has plunged the global aviation industry into its worst crisis, bringing air travel to a virtual standstill.
Airlines across Europe have asked for government help as coronavirus closures have forced them to bring their fleets to a standstill. By approving the French state guarantee and the shareholder loan to Air France, the European Commission noted the importance of the carrier, with more than 300 planes, for the French economy and its role in the repatriation of stranded citizens. and the transport of medical supplies.
Norwegian grounded 95% of its fleet in mid-March and had warned it could run out of cash by mid-month unless it implements its bailout.
Norwegian founder and former chief executive Bjorn Kjos had been working behind the scenes to garner shareholder support for the bailout since last week and swayed the minds of an investor group led by Helge Stray, reported local media.
Bondholders had already backed the plan on Sunday, after rejecting it in a vote on Friday. The airline said it had obtained written consent from key NAS07 bond holders after improving some of the conditions. He will hold another bond vote on May 18, where the airline will have to formally secure 67% support.
The lessors, owners of the Norwegian plane, had also subscribed to the plan, the carrier said a few minutes before the start of the shareholders’ meeting. “With significant contributions from lessors and bondholders, the company plans to convert over SEK 10 billion of debt into equity.”
The sale of the shares will begin on Tuesday and is expected to be finalized by May 11.
In recent years, Norwegian has grown from being a small local carrier to pioneering low cost long-haul flights, for example to the United States. It carries nearly 6 million British passengers each year from Gatwick, Edinburgh and Manchester airports to 30 destinations around the world.
Norwegian warned a week ago that almost all of its fleet of 160 will remain on the ground until 2021, with just seven flights so far, mostly carrying essential cargo on state-subsidized domestic flights. in Norway. It has temporarily laid off more than 80% of its workforce.